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Since its release in 2007, Apple’s iPhone has been available exclusively to AT&T customers in the United States. Since that launch, rumors have been swirling that Apple would be bringing its smartphone to Verizon’s network sooner rather than later. But more than three years since that launch, the company hasn’t done it. Some industry watchers are wondering when its exclusivity deal with AT&T will finally end.
But at least one analyst, Shaw Wu from Kaufman Bros., believes that exclusivity deal will come to a close. When it does, Apple’s iPhone will soon be on Verizon store shelves and its mobile network. There have been many reports that this will finally happen in early 2011, but there has been no confirmation from Apple.
But perhaps most importantly, Wu believes that Verizon could even pay Apple for the right to limit the iPhone’s availability to AT&T and Verizon to keep it out of the hands of T-Mobile and Sprint.
Although Apple hasn’t confirmed that report, it certainly sounds like a good idea for the hardware company. Yes, it might be nice to bring the iPhone to as many customers as possible, but in this case, it’s best if Apple sticks with AT&T and Verizon.
Here’s why:
1. Verizon and AT&T are enough
First and foremost, Apple needs to realize that Verizon and AT&T are enough. Sprint and T-Mobile aren’t the leaders in the U.S. mobile market; Verizon and AT&T are. As a company that does its best to align with the top companies in any market, it would only make sense for Apple to limit the availability of its smartphone to the top carriers, rather than allow it to be offered on most of the major U.S. wireless networks. AT&T isn’t enough for either consumers or Apple. But if Verizon is included, the vast majority of the market will be satisfied.
2. Supply concerns
If Apple finally announces iPhone availability on Verizon’s network, the company will be facing huge demand for the device. As a result Apple might have trouble filling the demand from both Verizon and AT&T customers. If Apple were to offer the iPhone on T-Mobile and Sprint networks as well, the supply chain would be even more strained, which could potentially discourage more customers.
3. Size must play a role
As of the end of the third quarter, T-Mobile had approximately 33 million customers, according to its quarterly filing. Sprint has around 33 million postpaid subscribers, according to its own third-quarter filing. Verizon, on the other hand, had about 93 million subscribers at the end of the third quarter. Based on those figures, and considering there is a finite supply of iPhones available to consumers, why would Apple want to even worry about bringing its iPhone to T-Mobile and Sprint? The big winner is Verizon.
4. All the bases are covered without them
AT&T’s network uses GSM technology, while Verizon’s uses CDMA technology. If Apple decides to bring its smartphone to Verizon’s network ahead of Sprint or T-Mobile, the company will have the two main wireless technologies covered with its iPhone. Granted, Sprint and T-Mobile customers would be forced to switch providers, but as AT&T has shown, consumers are ready and willing to do just that.
iPhone Exclusiveness Is Part of Its Appeal
5. The 4G consideration
If Apple inks a deal with Verizon and then needs to decide if it should bring its smartphone to other carriers’ networks, 4G must play a role in that decision. The future of wireless connectivity is firmly rooted in 4G. Verizon is already heavily invested in that space going forward. Granted, Sprint is as well, but Verizon is well on its way to besting its competitor. That’s a factor Apple must keep in mind.
6. It’s not what consumers want right now
Let’s face it: Consumers don’t want to see Apple announce that its iPhone will be made available to T-Mobile and Sprint customers. The average consumer has been waiting for Apple to announce that its iPhone will be coming to Verizon’s stores. That should be Apple’s focus right now. Then Apple will have all the time in the world to consider whether there will ever be a good time to bring its smartphone to T-Mobile or Sprint.
7. It speaks to its uniqueness
There is something to be said for offering the iPhone on all carriers. After all, by doing so, Apple can maximize its market. But as its history has shown, Apple doesn’t necessarily care about maximizing its market. The company cares most about providing a high-end device in a way that makes it unique, possibly less attainable and thus more attractive than competing products. It’s another factor that makes its iPhone so compelling. Apple shouldn’t lose sight of that as it considers whether it should bring the smartphone to T-Mobile and Sprint.
8. Prior to Verizon, it would be a letdown
Although speculation abounds that Apple will first bring the iPhone to Verizon and then think about other carriers after that, the company would make a huge mistake by first announcing availability of its smartphone on another carrier, like T-Mobile or Sprint. Verizon has been the subject of rumors for years, and it’s what the market expects. By not offering the Verizon option, Apple could put itself in a very bad position among consumers and enterprise customers.
9. A new and improved iPhone is more important
Every year, Apple offers a new iPhone with updates over the earlier model. And each year, even though it’s offering the device to one carrier in the United States, it faces challenges-just look at the white iPhone for proof of that. But by adding three carriers, Apple’s design and quality control challenges could increase exponentially Apple may just have to accept that as a necessary evil. Make no mistake that the more carriers Apple works with, the more it could hurt the quality and reliability of its products.
10. Investors would take issue
At the end of the day, Apple is a public company that needs to consistently provide value to its investors. But it can only do that if it makes sound business decisions that benefit investors. Right now, it’s hard to imagine that investors who have been waiting for Apple to partner with Verizon would be all that happy to see it choose Sprint and T-Mobile first. If Apple confirms a Verizon deal, the addition of Sprint and T-Mobile probably wouldn’t impact investor demand much. That’s something that Apple should keep in mind.